Encoder Market Report: Size, Share and Outlook by 2031

The encoder market is projected to grow significantly, reaching a value of US$ 6.21 billion by the year 2031, up from US$ 2.81 billion in 2023. This growth represents an estimated compound annual growth rate (CAGR) of 10.4% from 2023 to 2031.

Geographically, the encoder market is divided into several regions: North America, Europe, Asia Pacific, Middle East and Africa, and South and Central America. Among these, the Asia Pacific region is anticipated to experience substantial growth in 2023. Within APAC, the encoder market is further categorized into China, India, Japan, Australia, South Korea, and the Rest of APAC. The increasing demand for advanced manufacturing technologies, particularly computerized numerical control (CNC) machines, is a key driver of growth in the encoder market.

Encoders play a vital role in the closed-loop control systems of CNC machines, ensuring accurate movement and positioning during machining processes. They convert mechanical actions into electrical signals that are interpreted by the CNC controller, enabling the machine to execute precise cuts and movements according to programmed specifications. The global trend towards automation in various industries has led to a higher adoption of CNC machines, which in turn boosts the demand for encoders to maintain precision in machine operations. For example, data from Piran Advanced Composites published in May 2024 indicates that CNC machines are extensively utilized in sectors such as aerospace, automotive, marine, medical, and renewable energy to streamline manufacturing processes. The ability of encoder-equipped CNC machines to detect and rectify errors minimizes downtime and enhances overall production efficiency. Without encoders, achieving the high precision and reliability required in contemporary manufacturing would be challenging.

Furthermore, according to information from ANYbotics AG, the Singapore government hosted the SPRINT Robotics APAC Summit to promote awareness regarding the inspection and maintenance of robots, highlighting the advantages of robotic automation in industrial processes. The increasing integration of robots in various industries has escalated the need for encoders, which provide precise control over motors and actuators, enabling robots to perform tasks with exceptional accuracy. Consequently, the growing recognition of the benefits of industrial robots, coupled with government initiatives to encourage robotic adoption, is propelling market growth in the Asia Pacific region.

The analysis of the encoder market has been conducted by examining various segments, including Type and Technology.

In terms of type, the global encoder market is divided into linear and rotary encoders. Rotary encoders are essential for providing feedback on the movement of rotating objects or equipment, such as motor shafts, robotics, and machinery where rotational motion control is critical. These encoders convert the angular position of a moving shaft into either an analog or digital output signal, allowing control systems to ascertain the position or speed of the shaft. Rotary encoders can be designed with shafts or as thru-bore encoders, which facilitate direct installation on rotating shafts like motors. Thru-bore encoders come in various diameters and offer clamp or set screw mounting options, making them suitable for machine design applications. Flanges are utilized to secure the encoder and prevent it from rotating with the moving shaft.

Additionally, factors such as the rising demand from the automotive sector and increased product development by manufacturers are driving the growth of the encoder market. The emerging application of encoders in medical and healthcare devices is also expected to introduce new trends in the encoder market in the near future.

From a technological perspective, the global encoder market is categorized into optical, magnetic, inductive, and other types. Optical encoders are recognized as the most accurate among sensor technologies. A rotary optical encoder consists of a light source, typically an LED, and a rotating disk featuring a pattern of opaque lines and alternating translucent slots. As the disk turns, light passes through the translucent slots and is detected by a photosensor positioned on the opposite side. The photosensor generates a sinusoidal electrical signal based on the light detected in the translucent slots and the absence of light from the opaque lines. This sinusoidal signal is then converted into a square wave signal, composed of high and low pulses, which are sent to a control circuit. This allows the control system to count the pulses as the encoder rotates, enabling it to determine the position of the rotating shaft or execute actions based on its movement. Optical encoders are commonly used in clean environments such as laboratories and semiconductor manufacturing, where precision is paramount.

Key players in the encoder market include Asahi Kasei Microdevices Corp, Vishay Intertechnology Inc, Sick AG, Honeywell International Inc, ROHM Co Ltd, Allegro MicroSystems Inc, Autonics Corporation, On Semiconductor Corp, Texas Instruments Inc, Analog Devices Inc, Microchip Technology Inc, STMicroelectronics NV, Broadcom Inc, OMRON Corp, and Panasonic Holdings Corp.

The forecast for the encoder market is based on a combination of secondary and primary research findings, including key company publications, industry association data, and various databases. Comprehensive secondary research has been conducted using both internal and external sources to gather qualitative and quantitative insights related to the growth of the encoder market. This process aids in forming an overview and forecast of the market across all segments. Additionally, numerous primary interviews have been conducted with industry stakeholders to validate the data and obtain analytical insights. This includes discussions with industry experts such as VPs, business development managers, market intelligence managers, and national sales managers, as well as external consultants like valuation experts, research analysts, and key opinion leaders specializing in the encoder market.